How the IRS Can Disrupt Your Travel Plans

Daily ReckoningDaily ReckoningMarch 8, 2019

This post How the IRS Can Disrupt Your Travel Plans appeared first on Daily Reckoning.

When you travel out of the U.S. you need a passport. And some countries won’t let you enter unless your passport is valid for at least six months beyond the dates of your trip. Moreover, the airline might not let you board if that requirement isn’t met.

Not to worry … renewing your passport by mail is an easy task.

You just need a new photo, $110, and Form DS-82. And in 4-6 weeks you’ll have your new passport. For an extra $76.48 you can get it even sooner.

However if you owe a significant amount of income taxes, you could have a problem because of the …

FAST Act

The Fixing America’s Surface Transportation (FAST) Act became law on Dec. 4, 2015, and was meant to provide long-term funding for transportation projects, such as highways. It also included a provision allowing the State Department to snatch passports from delinquent taxpayers.

It works like this:

The IRS doesn’t control passports. That’s the State Department’s job. And the State Department doesn’t have access to taxpayer information. That’s IRS territory.

The FAST Act bridged that gap by requiring the IRS to share names of seriously delinquent taxpayers with the State Department. The Secretary of State is then authorized to deny or revoke passports of those individuals.

To be on that list you need to have more than $52,000 of overdue tax debt, including interest and penalties.

That may seem like a lot, but according to the IRS at least 362,000 are affected by the law.

Is the FACT Act Working?

Apparently so…

One debtor paid $1 million to avoid passport denial. And as of mid-2018, over $11.5 million was collected from 220 individuals. Another 1,400 had signed installment agreements.

Exceptions

If you’re making timely payments under an installment agreement or under an Offer In Compromise, the law doesn’t apply.

The same for any debt in which you’ve requested a Collection Due Process hearing or a debt where collection has been suspended due to an innocent spouse claim.

Also exempt are those in bankruptcy, in a federally declared disaster area, or serving in a combat zone.

Furthermore, the State Department may still issue a passport for emergencies or humanitarian reasons.

They’ll also make sure a U.S. citizen can return from abroad.

How to Get Off the Delinquent Payer List…

The IRS must notify you in writing the same time it sends your name to the State Department. And the State Department will hold your passport application or renewal for 90 days for you to fix any errors, pay in full, or agree to a payment plan.

When those 90 days are up, the State Department revokes your passport request … no grace period whatsoever. Then you’ll have to reapply.

To get removed from the list, you must prove that the debt:

  1. Has been paid
  2. Is in the process of being paid
  3. Is legally unenforceable, or
  4. Does not meet the $52,000 threshold 

You might think that if you aren’t planning to travel out of the country, the FACT Act surely won’t affect you.

Before relaxing too much, think again …

Impact On Domestic Flights

As of Feb. 5, 2018, the Department of Homeland Security (DHS) began requiring that every air traveler have a REAL ID-compliant driver’s license or acceptable form of identification, such as a passport, for domestic flights.

So if your state is not compliant (or received an extension) with the REAL ID Act and your passport was not renewed or yanked because of a huge tax debt, you could be grounded.

Bottom Line

The IRS issued a news release advising that it’s stepping up efforts to collect large outstanding tax debts by using the FAST Act’s passport provision. And the State Department has confirmed that it has already denied applications for some debtors.

For now, new passports and renewals are only being denied, not revoked. But that could quickly change.

So don’t let the government derail your travel plans, get those tax obligations resolved beforehand.

To a richer life,

Nilus Mattive

— Nilus Mattive
Editor, The Rich Life Roadmap

The post How the IRS Can Disrupt Your Travel Plans appeared first on Daily Reckoning.

Source: Daily Reckoning


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